It is not a smart decision to liquidate your fixed deposit when you need money in an emergency. In this way, you are going to lose your interest rate and other benefits attached to your fixed deposits. To prevent yourself from the financial hassle as well as fulfill your need of cash, the bank provides the facility to avail the loan against fixed deposit. It ensures the benefit of the user and enables you to borrow a loan at comparatively lower rate of interest. The main benefit of this loan is that the user continues to earn interest on the fixed deposit even if the loan is sanctioned by the same bank having the customer FD in their branch.

Loan against the fixed deposit is
a kind of short-term debt elevated rapidly from the existing resources. The
amount of loan against FD depends on the amount of the fixed deposit. It can be
no more than ninety per cent of the amount of fixed deposit. There is a slight
difference between the rates of interest as compared to other types of loan.
The tenure of the loan amount is parallel to the maturity period of the fixed
deposit.

Instead of liquidating your
investments, it becomes easy to take a loan against fixed deposit which is one
of the best and cheaper options to borrow money during any sort of financial
emergency. The interest rate of banks in fixed deposit is between 1 to 2.5 per
cent greater than the existing rate of fixed deposit.

For instance, if you get
interests on the fixed deposit at 7.5 per cent, then the bank will provide you
with the loan against a fixed deposit at the rate of around 8.5-10 per cent.
Your credit scores is not checked by the bank to approve your loan against FD
and the documentation is quite stress-free. The customers with low credit score
can also borrow loan against FD. In addition to this, there is no processing
fee and you can also continue to earn interest on fixed deposit.

With an alternative of fixed
deposit, there are some advantages and factors that play an important role. One
of the big advantages is no pre-closure charges in a possible manner. For the
lender, the fixed deposit works as a firm safety point. Immediate good level,
as well as favorable posture, gets by the available amount and tenure for the
amount. In the times of emergency, the flexibility and effective help will be
provided while computing the rate of interest on loan against fixed deposit. A
personal loan is relatively expensive as compared to the loan against FD.
Moreover, the processing time is simplest and more rapidly than other available
options. The structure of repayment of the loan is very easy and this loan is
considered as the demand loan. Apart from the EMI, there is another alternative
which is an overdraft option along with a renewable line. Last but not the
least, ease of paying the interest is an amazing advantage with the loan
against fixed deposit.

In case the fund requirement is
permanent and / or the fund generation to recoup the deposit amount (and repay
the loan availed) exceeds the deposit tenor, then it may be advisable to
liquidate the fixed deposit. However, if the fund requirement is short term and
the amount would be replenished within a short timeframe, it is most beneficial
to avail overdraft facility against the deposit. It may be mentioned that even
if the interest rate on the overdraft is higher by couple of percentage, the
interest charged on the overdraft is only on the amount drawn and outstanding
and only for the period for which the amount is availed. Thus, in case the
requirement is short term, then avail loan against fixed deposit and when there
would be fluctuation in fund requirement it is advised to take overdraft.

Financial needs changes day by
day. It depends on the specified amount of money as well as the pressure of
money whether you want to get loan sanctioned against fixed deposit or not. A loan
against FD can be a smart option if you have corresponding amount of money
available in your fixed deposit.

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Disclaimer: Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Antworks P2P Financing Private Limited, and does not provide any assurance for repayment of the loans lent on it. Antworks P2P Financing Private Limited is having a valid certificate of registration dated April 01, 2019 issued by the Reserve Bank of India under Section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or the opinions expressed by the company and for repayment of deposits / discharge of liabilities by the company.

The information contained herein is only to enable the Lender to make a considered decision. Any decision taken by the Lender on the basis of this information is the sole responsibility of the Lender and Antworks P2P Financing is not liable. This information does not include any sensitive personal data or information of the Borrower. Antworks P2P Financing only facilitates a virtual meeting place between the Borrowers and the Lenders on its online platform. The decision to lend is entirely at the discretion of the Lender and Antworks P2P Financing does not guarantee that the Borrowers will receive any loans from the Lenders. Antworks P2P Financing merely aids and assist the Lenders and the Borrowers listed on its website to make and receive loans and charges a service fee from the Lenders and the Borrowers for such assistance. Antworks P2P Fianncing is only an ‘Intermediary’ under the provisions of the Information Technology Act, 1999.